Nickel and dimed when you fly

As air fares dive, the fees keep rising. Most of them are annoying, but you may still be paying less to fly in the long run.

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By Aaron Smith, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Airfares are at their lowest levels in years, so airlines are trying to find new ways to make money. And that means extra fees -- more than $1 billion from last year alone, according to the Department of Transportation.

The latest add-on is a $10 surcharge for flying on some of the busiest travel days of the year, most of which fall right around the holidays:

The extra charge applies to three days: Nov. 29, which is the Sunday after Thanksgiving, and Jan. 2 and 3. The carriers have added 10 more peak days through 2010.

Five carriers, including U.S. Airways (LCC, Fortune 500), AMR Corp.'s (AMR, Fortune 500) American Airlines,UAL Corp.'s (UAUA, Fortune 500) United Airlines, Continental Airlines (CAL, Fortune 500) and Delta Air Lines (DAL, Fortune 500), recently added the surcharge to holiday flights.

Airlines have historically raised their fares during the holiday season, rather than impose additional charges. But experts say that adding a fee is less disruptive than a fare increase.

"It's interesting that they're doing it this way," said Anne Banas, executive editor of travel site SmarterTravel. "I think they're just easing the consumers into paying more incrementally. They're inching it up, like they did with baggage."

The holiday surcharge joins the slew of fees that many airlines began charging in 2008 for once-free amenities such as checked baggage, curbside check-in, pet travel, ticket re-scheduling and oversized bags, as well as food, soda and juice.

Prepaying for checked baggage

For passengers who are willing to prepay baggage fees in a big lump sum, United recently unveiled a tweaked version of its baggage fees.

Its Premier Baggage Subscription costs $249 a year, and covers the first two checked bags for a single traveler, and up to eight friends or family members included in the ticket purchase, according to United Airlines spokesman Rahsaan Johnson.

"If you've got a family of nine going to a family reunion, you could save the $249 [in one flight]," he said.

Normally, United charges $15 for the first bag and $25 for the second. So a single traveler with two checked bags would have to travel seven times in one year to save money with the subscription.

Business travelers who have to foot their own travel bills could benefit, according to said George Hobica, founder of the Airfarewatchdog.com, but he doubted that too many fliers fit the family profile described by Johnson.

Paying more for priority boarding

In another bid to make money, some airlines are selling optional benefits to upgrade service.

United's Premier Travel program now extends its Premier membership benefits, such as priority boarding and security line access, to passengers who pay $47 for one day.

United passengers can also buy into its Red Carpet Club for a day. For $50 at the door or $39 online, they wait in a luxury lounge with passengers who pay $525 for the annual membership.

The one-day Premier Travel offer could work for travelers who "know they're going to go through a busy airport with lots of security lines" and want to streamline the process, Hobica said.

He added that the Red Carpet Club could also be useful if you're suddenly confronted with a canceled or delayed flight. "If the airport is in chaos because of weather, I would definitely do the [Red Carpet,] because it's much more comfortable waiting."

Southwest Airlines recently added an optional $10 early-bird priority boarding fee, according to company spokeswoman, Brandy King, who said this will allow passengers to check in 36 hours ahead of the flight, instead of the typical 24.

"I can't imagine that they'll make much money from that," said Banas. For most travelers, she said early boarding fees are just not worth it.

Hobica dismissed the plan as "a timid effort to raise their fees without offending anyone."

Deals are still out there

One fee that is coming down is pet transport. Hobica said that United reduced the cost to $125 from $175 in August, and Delta lowered its fees to $100 from $150.

"United had some of the highest fees, and that's why they took them back," he said, noting that United also eliminated its fee for booking frequent flier tickets 21 days or less ahead of a flight.

Airlines "can't really charge for much more, to be honest," according to Rick Seaney, Chief Executive of Farecompare.com.

But 2009 is still a great year to fly, he noted, pointing out that fares are 15% cheaper than they were last year. "Domestic flights are as low as they've been since we started tracking them seven or eight years ago," he said.

Given those low fares, Hobica said the fees have become a necessity for the struggling airline industry.

"What does the public expect?" he said. "Do they want them to go out of business? The airline industry is in crisis right now and I think they need to cut them slack and let them make some money."

The fees come with an inherent public relations problem, which happens anytime you charge for something that used to be free said Seaney. But those fees can add up to as much as 7% of an airline's revenue, he said, which is well worth the flack. To top of page

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